AC1.1 & AC1.2: Supply Chain Management - Planning and Design Report

This report examines the core concepts of supply chain management, differentiating between strategic and operational planning. Strategic planning involves long-term decisions like production location and capacity, while operational planning focuses on short-term actions such as demand for...Read More

RUNNING HEAD: SUPPLY CHAIN MANAGEMENT
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Supply Chain Management
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AC1.1 Explain what is meant by Strategic and Operational Planning within a Supply Chain?
Strategic planning is considered as the process of defining strategies and making decision of
allocating resources to complement and implement that strategy in the organization. There is
strong connection between management and design of the flow of supply chain. In relation to
supply chain, strategic planning is done to take decisions related to supply chain and that
decisions are location of production, warehouse capacity, decision regarding storage and
manufacturing of products and to decide whether supply chain function should outsourced or
performed in the company. Planning in supply chain includes three aspects that re strategic
planning, tactical planning, and operational planning (Jonsson and Holmström, 2016). Strategic
planning refers to the strategic decision that are taken for long run and that are related to optimal
configuration and production network. The decisions that are taken for log run in strategic
planning includes location, capacity sizing, pricing policies, production allocation, technology
selection, and vertical integration pricing (Ivanov, 2010). Tactical planning refers decision
regarding demand fulfillment and management of flow of material. The main focus of tactical
planning is related to coordination of supply chain, production allocation, transportation policies,
safety stock, lead time reduction and inventory policies (Ballou, 2007). Operational planning is
basically related to short term decision that includes following aspect such as customer demand
forecasting, warehouse scheduling, and vehicle routing (Swink et.al, 2017).
From the operation perspective in supply chain there are four perspectives; top down perspective,
market requirement perspective, bottom up perspective and operation resource perspective.
These perspectives help in understanding the complete picture of operation planning in supply
chain (Huo et.al, 2017). At an operational level, the planning policies of supply chain area
already defined and the configuration of supply chain. The main goals of supply chain at
operational level are to handle the orders of customer and in the best way. Operation in supply
chain includes following decisions, firstly managing production and allocation of inventory,
follow up with orders, generation of pick list at warehouse, selecting mode of transport for an
order, coordinating with delivery schedules. The main goal of operational planning in supply
chain is to improve performance and take benefit from the reduction in uncertain events (Jacobs
and Chase, 2008). Top down perspective and bottom down perspective have different views and

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thinking. At the top level in the organization, all the information are easily available to take
decision but at the bottom information of organization operation is available more practically and
in real way. At market requirement perspective, operations of an organization make the link
between strategy and requirement and in view of operational perspective, planning is based on
the capability of the chosen market (Das, 2011).
Strategic planning and operational planning helps in optimizing the supply chain and with that
planning some changes are done in level of services, policies, lead time, warehouse layouts,
communication channel, batch sizes and all these changes helps in getting effectiveness and
efficiency in the supply chain. Strategic planning in supply chain mainly related to the
management as management takes high level strategic decision that have direct impact on the
organization functioning and operations. Strategic planning in supply chain is connected with
product development, manufacturing, logistics, suppliers and customers (Feng et. al, 2017).
Strategic planning gives strategic direction by considering the product to be offer to customers as
product cycle and development is the core of any supply chain. In strategic planning, customers
are identified or target audience is know so that an effective supply chain can be formed to reach
that customers and all this includes in strategic planning. Further strategic planning is done for
developing supply chain policies for the suppliers of products in the organization and strategic
planning helps the management to select strategic suppliers so that overall goals of the
organization can be achieved and efficient supply chain can be developed or formed. At last,
strategic planning related to logistics function is done as the logistic area is considered as an
important aspect in supply chain and planning that is important consideration in supply chain so
with the strategic planning the organization take strategic decision for logistic network to be
chosen so that performance of supply chain can be improved (Christopher, 2016).
Strategic and operational planning “determine the overall direction of the company’s supply
chain” and that is connected with the overall objectives of the organization as these planning are
not done for a particular product or for a particular location this is done to improve overall
efficiency of supply chain and for achieving the objectives of organization. These plans are
working or not can only be understand when an organization is delivering on time to its customer
when they raise demand and by spending the less amount to get it done then only supply chain is
optimized (Soosay and Hyland, 2015).

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AC1.2 Describe the process involved with the designing of a supply chain plan to meet the
objectives of an organization?
Supply chain management plays a significant role in running the operations of every
organization as without an efficient supply chain the processes could break down at the floor
level and affect the final result. With changing concept of supply chain and with increasing
importance of it the role of supply chain managers is also changed, managers have given the
responsibility to ensure that supply chain of the organization should be cost effective and
efficient (Stadtler, 2015). Supply chain planning is considered as the forward process that focus
on coordinating the assets, services, goods and information from the customer to supplier and
balancing demand and supply. Further designing of supply chain plan include demand planning,
inventory planning, scheduling, distribution planning and collaborative planning. In elaborative
way it includes decision regarding market to be supplied, demand of the product in near future,
policies adopted for inventory management and size and timing of marketing.
The process of supply chain planning starts by creating a demand plan for the organization that
includes analyzing the past sales record and forecasting the future demand of a product and after
approval of demand plans other steps are shipping actions, corresponding planning and
execution. Supply chain planning mainly involves tactical actions that help the organization to
prepare for future (Fredendall and Hill, 2016). Further, efficient supply chain planning benefits
the organization in following ways; by coordinating resources to optimize operations in the
organization, by coordinating manufacturing of products and delivery of products. Other steps in
supply chain planning are distribution network plan, inventory policies and master production
planning. Supply chain planning benefits the organization by reducing the chances stock
shortage, ensure faster cycle time, and helps in maintaining lower inventory that reduces the
maintenance and storage cost for the organization and all these steps helps the organization to
achieve its objectives and supply chain planning is an important element of supply chain and to
ensure the efficiency of supple chain it is important to focus more on supply chain planning
(Tarafdar and Qrunfleh, 2017).

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To improve the supply chain of any organization the main tool is PDCA cycle that helps the
company to improve existing process. PDCA cycle or Deming cycle is divided into four stages
that are Plan, Do, Check and Act. This cycle helps the organization to attain organizational
objectives and to improve supply chain process as first step is Plan; this is all related to analyzing
the current environment or processes of business and according to that observation goals and
objectives are revised or set. The targets are set by using different tools such as benchmarking,
using theoretical calculation and by using time study. Action plans help the organization to set
the target so that best can be achieved in processes, products and in supply chain. Next step in
this cycle is “Do” this focus on collecting the data and arranging resources and allocating them
for accomplishment of objectives. Arrangement of resources includes manpower required, time
frame, financial resources and technological infrastructures. Further, last two steps in cycle are
check and act, check includes comparison of actual target achieved and expected target and if
there is any deviation then knowing the exact reason of that deviation and for that an
organization use various tools such as scatter diagrams, Pareto charts, and histograms. The last
step is “adjust” or act on the basis of above analyzing and the deviation that are known at this
step the adjustments are done in that part. So PDCA cycle helps in improving the supply chain
process by setting up the target, analyzing gaps and then taking steps to remove gaps. PDCA is
used in supply chain to improve the processes such as lead time reduction, procurement process,
logistics process and inventory management (Wieczerniak et. al, 2018).
Source: (Johnson, 2016)

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To improve the supply chain planning, PDCA is a tool to improve the processes and this can also
help in improving and designing the best supply chain plan. Improved supply chain planning
helps in achieving the organization objectives. So linking PDCA also helps in planning and
designing the supply chain. Efficiency in supply chain planning benefits or contributes in
following to achieve the organization objective such as by cutting the unnecessary movements as
proper plan is made about equipment, moving of goods, packaging, tools and warehouse location
(Reefke and Sundaram, 2018). Further by maintaining the sufficient level of inventor and opting
for batch production according to demand forecasted and all these small steps helps in improving
the supply chain planning process and designing.

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Bibliography
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